MTR 1377 Breakfast with Steve Price - 11/10/2010

11 October 2010

PRICE: Penny Wong is our Finance Minister and she is also at the moment the acting Treasurer. The Treasurer, Wayne Swan, is currently in Washington and the Minister is on the line. Thanks for your time.
WONG: Good morning. How are you?
PRICE: I am well, thank you. Wayne Swan is in Washington. Obviously the Australian dollar v the American dollar is what all the finance markets are talking about. We have hit, I think, 99 cents, Ross Greenwood told me this morning. Is that good news for us?
WONG: Obviously we have an exchange rate that is determined by the markets and that's been the case for many, many years now. A strong dollar is a reflection of the way in which the markets see the Australian economy, that it is a very strong economy. Obviously it is good for some parts of the economy. It does make it harder for others and the Government is conscious of that. But I think by and large people do agree that having a floating exchange rate, such as we have, is the best way to make sure that you have a flexible economy.
PRICE: The Opposition seem to be opposing things for the sake of opposing things. Andrew Robb is quoted this morning he is the shadow finance spokesperson that the Aussie dollar is good news for travellers but it's a reflection of the Government's bad economic management. He says that he its penalising manufacturers and farmers as well as tourism operators and you must act. I mean what does he want you to do?
WONG: It's pretty rich I have to say coming from Mr Robb on a day where the extent of the deception that the Liberal Party sought to impose on Australians before the last election has been made clear. Not only did they have a $10.6 billion black hole in their costings, it has now been revealed today that in fact they did not tell the truth about the sorts of checks they had on those costings. So it's very clear that Mr Robb, Mr Hockey and Mr Abbott simply don't have the economic credibility that you would want in an alternative government.
PRICE: What should they do about that suggestion that is now coming from this accounting firm that they indeed were not doing full costings; that they were in fact just setting a unit up to have a look?
WONG: That isn't what Mr Hockey told Australians before the last election and that isn't what Mr Robb told Australians before the last election. Really what this shows is Mr Abbott and his economic team weren't upfront with the Australian people either about their costings where we see a $10.6 billion black hole or the checks that they said they were doing on them. They have been found out today.
PRICE: I think the electorate should demand that both sides of politics, regardless of this fear that they had of leaks, put all of their costings before the independent Treasury analysis before an election. Don't we deserve that? Isn't that why we made the change in the first place?
WONG: Well this was a change that was made some years ago. And it's a policy that the Labor Party and the Labor Government complied with. We did want the costings to go before the Australian people because we think people should know what the cost of parties' policies are and whether they've made the right costings decisions. And unfortunately we saw, during the federal election campaign, Mr Robb give a range of excuses. It was like a series of 'I haven't done my homework' excuses over many weeks about why he wasn't going to submit the Liberal Party's policies for costings. And really we see today why that was. The costings had holes in them and the checks weren't adequate.
PRICE: Queensland Rail will float its business today through the Queensland Government. Mum and dad investors being asked to invest. Mum and dad investors would be a little shy of that given their experience with Telstra, wouldn't they?
WONG: People's decisions to buy shares or not buy shares is obviously a matter for them. And people just need to make sure they're informed and make the best judgments they can about the prospects of any share acquisition that they engage in.
PRICE: I notice that the former Prime Minister, John Howard, has said that the rest of the world hates the mining tax and says that top level strategic business and energy leaders around the world are amazed we would introduce a mining tax. Is he right?
WONG: Look we are seeing very significantly higher prices for many of our mining exports. And the question really is for Australia, how do we use the proceeds from this boom wisely? How do we manage this sort of growth for the long term? And the Government put forward our policies about how we do that. They are reducing the company tax rate, investing in skills, investing in infrastructure, investing in the NBN. This is all about broadening and strengthening the Australian economy.
PRICE: So the mining tax, you believe, is good policy?
WONG: Look we think it is a reasonable arrangement. A reasonable arrangement that, as you may recall, that very large mining companies have said that they are prepared to pay. So this is about using the boom wisely, using the proceeds of this boom wisely, looking to the long term, investing in those things that make our whole economy stronger. And that's what the Government's doing.
PRICE: But as Finance Minister, you would be concerned if there were economies around the world, other countries, saying to leading mining companies, 'Don't go to Australia, do your business here and we won't slug you with a mining tax'
WONG: I think we've seen in the figures that have been released over the last few months a very substantial increase, not only in investment now, but also future investment plans of mining companies in Australia. A very substantial increase in the investment that miners will make in Australia. I think the question is how do we use the benefits of what are very high prices over this period for many of our resources exports and how do we use them wisely?
PRICE: And where are we at with a carbon tax? I mean in your former portfolio obviously you did a lot of work towards the Copenhagen climate change summit. You are an advocate of taxing carbon. How quickly will we get a carbon tax, how much will it be and when will we know?
WONG: Steve, there was a lot of work done but obviously that didn't come to pass for a whole range of reasons including the division inside the Liberal Party. What the Prime Minister and Greg Combet, who is the Minister for Climate Change, have said is that we will work through the multi-party committee that has been established. And we made some announcements last week about that including the importance of making sure that we go out and talk to Australians, engage in a strong dialogue about science and about the ways in which you can price pollution. So there's a process of engagement and dialogue that needs to be gone through. And that's what Minister Combet will lead.
PRICE: Is it embarrassing though given that during the election campaign, five days out, Julia Gillard said, 'there will be no carbon tax under any government I lead'?
WONG: I think Julia Gillard made it very clear leading up to the election that she believed that we have to price carbon. Obviously we had an approach before the last election which was a policy of a market mechanism. Since the election, I think it's very clear that this is a minority Government. The floor of the Parliament demonstrates which way the Australian people voted. And the Australian people did vote for this issue to be addressed. We have a long way to go in terms of ensuring we have a good dialogue with the community including the business community. But the Government will proceed with that dialogue because we think it's a sensible thing to do.
PRICE: But you're not claiming you have a mandate to introduce a carbon tax because the Green vote went up, are you?
WONG: What we are saying is that we were very clear before the last election that you do need a price on carbon if you're going to reduce emissions. And that we have a process in place that will enable business and community to engage in a good dialogue with the Parliament about the best way forward.
PRICE: OK thanks for your time.
WONG: Good to speak with you.